Dave’s Short Sale

I’m currently attempting to complete a short sale on a townhouse that I have outgrown and is approximately 100K upside down. I am 100% current on all payments, and the lender has approved the sale and will report it as paid in full for less than the amount owed, which I first thought was great. However, they stated that Fannie Mae would not allow me to close on the sale until I was at least 30 days delinquent. I had found lenders that claim they would be willing to give me a new mortgage because of my excellent credit and the fact that I was current on my existing mortgage (I believe given language in the 8/13/08 Fannie Q&A publication… question 7), but of course the 30 day delinquency will kill that option.

My question is whether this is an actual Fannie Mae policy. The same Q&A publication states, “A short-sale, however, can refer to situations in which the servicer/investor of the mortgage agrees to a payoff of a lesser amount than is actually owed, even on a current mortgage.” So how is it they have language in here that clearly states a short sale can be on a current mortgage yet at the same time require a mortgage to be delinquent?

Considering this, how do people who get moved because of their jobs purchase new homes? I work for the military and have seen situations where an individual with outstanding credit history gets moved to his next post and has to do a short sale through no fault of his own, thereby damaging his credit. Are there options out there for people like this? Private lending? Thanks in advance for your information… your site is very informative.

Dave

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Hello Dave,

The announcement you’ve cited actually permits a borrower who is 30-days delinquent (but not 60 or more days delinquent) to qualify for another Fannie Mae loan.  Specifically, the pertinent part of FNMA Announcement 08-16 states:

“If the borrower is purchasing a new property and the previous mortgage history complies with our excessive prior mortgage delinquency policy and does not have one or more 60-, 90-, 120-, or 150-day delinquencies reported within the 12 months prior to the credit report date, the loan is eligible for delivery to Fannie Mae, provided the lender or servicer who completed the short sale has not entered into any agreement that obligates the borrower to repay any amounts associated with the short sale, including a deficiency judgment.”

Kudos to you for finding a buyer willing to pay enough for the property that the lender didn’t have to take much of a hit and agreed to the short sale without the loan being seriously delinquent.  It’s happened a few times: here and here and there have been others.  The reality though, is that lenders prioritize files based on auction/sale date and generally won’t give a nice discount to a borrower unless the property is 90+ days delinquent. 

Thanks for the questions and hope this helps.

Paul